Company Reiterates Select Financial Guidance for Fiscal 2008 SAN
JOSE, Calif., Feb. 27 /PRNewswire-FirstCall/ -- Document Capture
Technologies, Inc. (OTC:DCMT) (BULLETIN BOARD: DCMT) , a leading
provider of secure imaging solutions, today announced financial
results for the fourth quarter and year ended December 31, 2007.
Net sales for the fourth quarter ended December 31, 2007 were $3.9
million, an increase of 15.0 percent, compared to $3.4 million in
net sales for the fourth quarter of 2006. The increase in net sales
in the quarter was primarily due to a shift in product mix toward
selling more high-end, feature-rich products, including the duplex
scanner, which has a higher average selling price relative to the
Company's older products. This was partially offset by lower sales
in the quarter to a significant customer. Cost of sales for the
fourth quarter of 2007 were $2.5 million, resulting in higher gross
profit of $1.4 million, or 35.7 percent gross margin, compared to
gross profit of $1.1 million, or 33.9 percent gross margin, based
on $2.2 million cost of sales for the fourth quarter of 2006. The
increased gross margin percentage experienced during the fourth
quarter of 2007 as compared to the fourth quarter of 2006 was
primarily a result of selling more feature-rich and higher end
products, which bear higher comparative margins. The Company's
newer and higher end products continue to experience broad market
acceptance and sustained sales traction. Total operating expenses
for the fourth quarter of 2007 were $1.2 million, a decrease of
$5.0 million, or 80.7 percent, from $6.2 million in the fourth
quarter of 2006. Selling and marketing expenses decreased 18.5
percent to $277,000 from $340,000; general and administrative
expenses decreased 84% to $537,000 from $3.4 million; and research
and development expenses were $387,000 compared to $1.6 million.
The decrease in selling and marketing was a result of no
display-related sales and marketing activities during fourth
quarter 2007 due to the termination of that portion of the
business. The decrease in general and administrative expense was a
result of lower stock-based compensation costs and the one-time
write off of related-party loans during the fourth quarter of 2007.
The decrease in research and development expenses was primarily due
to the write off of research and development-related intangible
assets and the right-sizing and headcount reductions related to HD
display development efforts. In addition, there was an $838,000
impairment of a certain long-term asset in the fourth quarter 2006,
also related to HD initiatives that did not re-occur in the fourth
quarter 2007. GAAP net income for the quarter was $164,000 compared
to GAAP net loss of $(4.3) million, for the fourth quarter last
year. GAAP net income available to common stockholders was $32,000
for the fourth quarter 2007 compared to a GAAP net loss of $(4.6)
million for the fourth quarter of 2006. On a non-GAAP* basis, net
income in the fourth quarter of 2007 was $129,000 compared to a
non-GAAP net loss of $(4.8 million) in the fourth quarter of 2006.
Non-GAAP net income (loss) excludes certain non cash items
including stock-based compensation cost and the accounting for
derivative instruments. For the year ended December 31, 2007, net
sales were $15.0 million, an increase of 20.5 percent compared to
$12.5 million in net sales for the same period last year. Cost of
sales were $9.1 million, resulting in gross profit of $5.9 million,
or 39.3 percent gross margin, compared to gross profit of $4.2
million or 34.1 percent gross margin based on $8.2 million in cost
of sales for the same period last year. Revenues for the year were
higher due to the shift toward selling more high-end products,
including our duplex scanner, with a higher average selling price
partially offset by a decline in revenues year-over-year from a
single large customer. Total operating expenses for the year ended
December 31, 2007 were $6.5 million, a 38.6 percent decrease, or
$4.0 million, from $10.5 million in the same period last year.
Selling and marketing expenses were $1.3 million compared to $1.2
million; general and administrative expenses were $2.7 million
compared to $5.4 million; and research and development expenses
were $2.4 million compared to $3.1 million. The decrease in general
and administrative expense was a result of lower stock-based
compensation costs and the one-time write off of related-party
loans. The decrease in research and development expenses was
primarily due to the write off of research and development-related
intangible assets and the right-sizing and headcount reductions in
the HD display development efforts. In addition, there was an
$838,000 impairment of a certain long-term asset in the year ended
2006, also related to HD initiatives that did not re-occur in the
fourth quarter 2007. Net loss for the year ended December 31, 2007
improved to $(1.1) million compared to a net loss of $(5.2) million
for the same period last year. The $4.1 million improvement in net
loss was primarily due to the one-time $555,000 amortization of
research and development-related intangibles, an $838,000
impairment of a long-term asset, and a $2.6 million write off of
related-party loans during Fiscal 2006, which did not re-occur in
Fiscal 2007. Net loss available to common stockholders was $(1.9)
million, or $(0.09) per common share basic and fully diluted (based
on 20.4 million weighted average basic and diluted common shares
outstanding) for the year ended December 31, 2007 compared to a net
loss available to common shareholders of $(5.9) million, or $(0.25)
per common basic and fully diluted share (based on 24.1 million
weighted average basic and diluted common shares outstanding) for
the same period last year. On a non-GAAP* basis, net income
available to common shareholders for the year ended December 31,
2007 was $630,000 compared to a non-GAAP* adjusted net loss
available to common shareholders of $(5.4) million for the same
period last year. Non-GAAP* net income (loss) excludes certain non
cash items including stock-based compensation cost and the
accounting for derivative instruments. The Company had cash and
cash equivalents of $1.8 million, working capital of $3.0 million,
and a current ratio of 2.1 to 1 at December 31, 2007 as compared to
cash and cash equivalents of $1.3 million, working capital of $2
million and a current ratio of 1.7 to 1 at December 31, 2006.
Carolyn Ellis, Chief Financial Officer of Document Capture
Technologies, Inc., commented, "The quarter and full year results
were driven by strong demand across our entire product line and we
are pleased to now be reporting positive operating cash flow.
Challenging decisions we have made in the past six months have
enabled us to focus our efforts, pare down losses, reach GAAP net
breakeven. As a reinvigorated organization we will continue to
build on these financial results. Our commitment to innovation
through document capture related R&D and consistently
introducing new products to the market have resulted in
year-over-year comparative sales growth for seven of the last eight
quarters and we expect our growth at the top-lines to continue to
track at current levels, while we move towards consistent
profitability and cash flow growth." "We have been exclusively
focused on the market for portable page-fed document scanners since
mid-November when we announced the termination of our HD
initiatives," commented David P. Clark, Chief Investment Officer of
Document Capture Technologies. "We have experienced broad
acceptance of our high-end image and document scanners that offer
high performance mobility with very low power consumption. In the
second half of the year we experienced an increase in orders from
nine of our top ten customers and added several key new accounts.
We believe that we are well-positioned for growth and expect to
introduce three new products to the market place in 2008 with a
roadmap for continued product innovations and introductions beyond.
With our corporate identity and singular focus, we are now poised
to take advantage of the many opportunities we see emerging in our
market space." Mr. Clark concluded, "Our senior management team
recently exercised founder stock options in the aggregate amount of
over 1.0 million shares, reflecting our confidence in the strength
of the Company's business, outlook, and the value that we see in
our common stock at current market prices. We made this
announcement in conjunction with issuing 2008 select financial
guidance, which we are reiterating today." The Company expects that
for full year 2008, revenues from its document capture, or mobile
scanning business, will be in the range of $18 million to $19
million and that gross margin will remain steady in the 38%-40%
range. Further, the Company expects that its 2008 full year
reported non-GAAP* adjusted EPS (adjusted for certain non-cash
items including stock-based compensation costs and the accounting
for derivative financial instruments) will be in the range of $0.13
to $0.15 per diluted share. *In addition to reporting financial
results in accordance with generally accepted accounting
principles, or GAAP, DCT uses non-GAAP measures of net income
(loss) and income (loss) per share, which are adjustments from
results based on GAAP to exclude non-cash stock-based compensation
costs in accordance with SFAS 123R and the non-cash accounting for
derivative financial instruments. DCT's management believes the
non-GAAP financial information provided in this release is useful
to investors' understanding and assessment of DCT's ongoing core
operations and prospects for the future. The presentation of this
non-GAAP financial information is not intended to be considered in
isolation or as a substitute for results prepared in accordance
with GAAP. Management uses both GAAP and non-GAAP information in
evaluating and operating business internally and as such deemed it
important to provide all this information to investors. Conference
Call on March 5, 2008, at 4:30 PM ET: Management will host a
conference call to discuss the audited results March 5, 2008, at
4:30 PM ET concurrent with filing the Form 10K with the Securities
and Exchange Commission. Anyone interested in participating should
dial in to 800-762-8795 if calling within the United States or
480-248-5085 if calling internationally. A re-play will be
available until March 12, 2008, which can be accessed by dialing
800-406-7325 if calling within the United States or 303-590-3030 if
calling internationally. Please use passcode 3850254 to access the
replay. The call will also be accompanied by a live webcast over
the Internet and accessible at DCT's corporate website at
http://www.docucap.com/. About Document Capture Technologies, Inc.
Document Capture Technologies, Inc. (OTCBB: DCMT.OB), headquartered
in San Jose, Calif., designs and manufactures document capture
solutions for OEM customers worldwide. The company currently
manufactures over 20 proprietary document capture products and has
become one of the world's largest private-label manufacturers of
USB-powered mobile document scanning devices. The Company's growing
intellectual property portfolio in document capture includes four
key patents with an additional one patent pending. Forward-Looking
Statements Statements contained in this press release, which are
not historical facts, are forward-looking statements as that term
is defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based largely on current
expectations and are subject to a number of known and unknown
risks, uncertainties and other factors beyond the Company's control
that could cause actual events and results to differ materially
from these statements. These risks include, without limitation,
that there can be no assurance that any strategic opportunities
will be available to the Company and that any strategic
opportunities may only be available on terms not acceptable to the
Company. These statements are not guarantees of future performance,
and readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
release. Document Capture undertakes no obligation to update
publicly any forward-looking statements. Company Contact: Document
Capture Technologies, Inc. David P. Clark (561) 835-4069 Investor
Contact: Hayden Communications, Inc. Peter Seltzberg (646) 415-8972
DOCUMENT CAPTURE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS (in thousands) Un-Audited December 31, 2007 2006
ASSETS Current assets: Cash and cash equivalents $1,770 $1,333
Trade receivables 2,464 1,813 Inventories, net 1,400 1,642 Prepaid
expenses and other current assets 32 73 Total current assets 5,666
4,861 Fixed assets, net 127 108 Long-term investment - 160 Total
assets $5,793 $5,129 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities: Bank line of credit $- $1,013 Notes payable
and related warrant liability 1,239 - Trade payables to related
parties 578 952 Trade payables 415 198 Other payables and accruals
243 506 Accrued dividends on Series A 5% cumulative convertible
stock preferred stock 178 152 Total current liabilities 2,653 2,821
Long-term bank line of credit 2,021 - Liability under derivative
contracts 255 229 Total liabilities 4,929 3,050 Commitments and
contingencies Convertible preferred stock, $.001 par value, 2,000
authorized: Series A 5% cumulative convertible preferred 1,074 957
stock, 11.5 and 16 shares issued and outstanding at December 31,
2007 and December 31, 2006, respectively; liquidation value of
$1,150 and $1,565 at December 31, 2007 and December 31, 2006,
respectively Series B convertible preferred stock, 1.5 and 70 152
11.5 shares issued and outstanding at December 31, 2007 and
December 31, 2006, respectively; liquidation value of $150 and
$1,150 at December 31, 2007 and December 31, 2006, respectively
Stockholders' (deficit) equity: Common stock $.001par value, 50,000
authorized, 15 24 15,904 shares issued and 15,404 outstanding at
December 31, 2007 and 24,642 shares issued and 24,142 outstanding
at December 31, 2006 (500 shares held in escrow) Additional paid-in
capital 30,323 29,651 Accumulated deficit (30,618) (28,705) Total
stockholders' (deficit) equity (280) 970 Total liabilities and
stockholders' (deficit) equity $5,793 $5,129 DOCUMENT CAPTURE
TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share amounts Un-Audited)
Three Months Ended Year Ended December 31, December 31, 2007 2006
2007 2006 Net sales $3,904 $3,394 $15,023 $12,469 Cost of sales
2,511 2,245 9,120 8,221 Gross profit 1,393 1,149 5,903 4,248
Operating expenses: Selling and marketing 277 340 1,349 1,240
General and administrative 537 3,398 2,675 5,361 Research and
development 387 1,635 2,439 3,084 Impairment of long-term
investment - 838 - 838 Total operating expenses 1,201 6,211 6,463
10,523 Operating income (loss) 192 (5,062) (560) (6,275) Other
income (expense): Change in fair value of derivative instruments
263 776 (238) 1,421 Fair value of warrants issued - - - (173)
Preferred stock issuance costs - (8) - (88) Other (291) (36) (258)
(81) Total other income (expense) (28) 732 (496) 1,079 Net loss
before income taxes 164 (4,330) (1,056) (5,196) Provision for
income taxes - 3 4 3 Net income (loss) 164 (4,333) (1,060) (5,199)
Dividend on Series A and accretion of Series A and Series B
preferred stock redemption value (132) (245) (853) (749) Net income
(loss) available to common stockholders $32 $(4,578) $(1,913)
$(5,948) Net income (loss) available to common stockholders per
Common share -- basic and diluted $0.00 $(0.19) $(0.09) $(0.25)
Weighted average common shares outstanding -- basic and diluted
15,271 24,142 20,420 24,105 DOCUMENT CAPTURE TECHNOLOGIES, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Un-Audited Year ended December 31, 2007 2006 Operating activities
Net loss available to common shareholders $(1,913) $(5,948)
Adjustments to reconcile net loss to cash used in operating
activities Depreciation and amortization 48 597 Fair value of
common stock warrants issued for services rendered 18 - Stock base
compensation cost -- options 1,426 1,311 Change in fair value of
derivative instruments 238 (1,421) Accretion of Series A and Series
B preferred stock redemption value 773 668 Preferred stock issuance
expenses paid by issuance of warrants - 173 Allowance for doubtful
accounts - 2,606 Allowance for slow-moving inventory 20 -
Impairment of long-term investment - 838 Interest expense
attributable to amortization of debt issuance costs 88 - Loss on
disposal of assets - 17 Changes in operating assets and
liabilities: Trade receivables (651) (528) Inventories 222 (891)
Prepaid expenses and other current assets 41 246 Trade payables 217
(61) Trade payables to related parties (374) 749 Other payables and
accruals (198) 324 Accrued dividends on Series A 5% cumulative
convertible stock 81 81 Cash provided (used) by operating
activities 36 (1,239) Investing activities Cash proceeds from sale
of long-term investment 160 - Capital expenditures (67) (4) Cash
provided (used) by investing activities 93 (4) Financing activities
Proceeds from the issuance of preferred stock - 1,150 Payoff of
existing bank line of credit (1,013) - Advances on replacement bank
line of credit 1,521 - Principal payments on notes payable (200) -
Cash provided (used) by financing activities 308 1,150 Increase
(decrease) in cash and cash equivalents 437 (93) Cash and cash
equivalents at beginning of year 1,333 1,426 Cash and cash
equivalents at end of year $1,770 $1,333 Supplemental disclosures
of cash flow information: Cash paid during the year for: Interest
$113 $92 Income taxes $4 $3 Non-cash investing and financing
activities: Restricted common stock acquired from related party $2
$- Conversion of convertible preferred stock to common stock $1,068
$30 Issuance of common stock warrants in connection with debt
financing $399 $- Purchase of restricted common stock for
retirement $2,000 $- DOCUMENT CAPTURE TECHNOLOGIES, INC. AND
SUBSIDIARIES RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(in thousands, except per share amounts) Un-Audited Three Months
Ended Year Ended December 31, December 31, 2007 2006 2007 2006 Net
income (loss) available to common stockholders (GAAP) $32 $(4,578)
$(1,913) $(5,948) Stock-based compensation cost -- options 154 334
1,426 1,311 Fair value of warrants issued for services rendered 4 -
18 - Interest expense attributable to amortization of debt issuance
costs 86 - 88 - Change in fair value of derivative instruments
(263) (776) 238 (1,421) Accretion of Series A and Series B
preferred stock redemption value 116 223 773 668 Net income (loss)
available to common stockholders (Non-GAAP) $129 $(4,797) $630
$(5,390) DATASOURCE: Document Capture Technologies, Inc. CONTACT:
David P. Clark of Document Capture Technologies, Inc.,
+1-561-835-4069, ; or Investors, Peter Seltzberg of Hayden
Communications, Inc., +1-646-415-8972, , for Document Capture
Technologies, Inc. Web site: http://www.docucap.com/
Copyright